UE - Urban Edge

[thepupil]

I told myself I wouldn't look any more RE names, but whatever. this one is easy enough, NY metro strips with lots of people around them

 

43% pre-covid NAV, pristine corporate balance sheet, cash rich, Vornado heritage, what's not to like?

 

its the ALX of the suburbs.

 

http://investors.uedge.com/Cache/IRCache/58aeaa85-3ef5-3fa4-1450-f05258330927.PDF?O=PDF&T=&Y=&D=&FID=58aeaa85-3ef5-3fa4-1450-f05258330927&iid=4546387

 

$1.2B market cap

$365mm net corporate cash (30% of market cap)

 

46 mortgage free properties doing $80mm annualized of NOI

28 mortgaged properties with $1.75 of mortgage debt, lots of options to hand back keys (recent results note a $130mm mortgage on some puerto rico property as an example, lose the bad keep the good).

 

In April, the Company defaulted on its $129 million non-recourse mortgage loan on Las Catalinas Mall in Puerto Rico, which now accrues

interest at a default rate of 7.43% (compared to the stated rate of 4.43%). Interest expense recognized in the second quarter of this

year was $2.4 million compared to $1.5 million in the second quarter of 2019. We remain in active negotiations with the servicer but no

determination has been made as to the timing or ultimate resolution of the debt restructuring that may arise from this process. The mall

generated $0.9 million of NOI in the second quarter of this year compared to $1.8 million in the second quarter of 2019. The Company's

net debt to Adjusted Earnings before interest, tax, depreciation and amortization for real estate ("EBITDAre") was 7.5x using our second

quarter's annualized EBITDAre and would have been 6.8x excluding Las Catalinas.

 

all those people fleeing to north jersey westchester and strong island gotta get their groceries and home maintenance supplies somewhere.

[thepupil]

This building was dark / non-occupied retail.

 

Now it's a warehouse / logistics asset.

 

http://urbanedge.propertycapsule.com/properties/lodiroute17#overview

 

 

NEW YORK--(BUSINESS WIRE)--Urban Edge Properties (NYSE:UE) today announced that AAA Wholesale Group has leased 130,000 square feet in a building at the intersection of Route 17 and Essex Street in Lodi, New Jersey. This lease represents a successful transformation of a former retail site into a warehouse and distribution facility.

 

The building will serve as a wholesale membership club supplying smaller grocery stores, delis, and convenience stores with grocery products, deli supplies, beverages, cleaning supplies and other household items. In addition, approximately 20,000 square feet of the space will be allocated to consumers wishing to shop in store.

 

AAA has successful locations in the Bronx and Brooklyn, and this location will be its first in New Jersey. The new location is expected to provide more than 100 new jobs to the area.

 

“Lodi is an ideal location for our buyers with excellent commercial access and easy loading. We are excited to open our first New Jersey location,” said Alex Almontaser, Founder and CEO of AAA Wholesale Group. “We have a partner in Urban Edge Properties that is vested in our success, reconfiguring the property to meet our needs and make it possible for us to service the surrounding community through direct to consumer wholesale merchandise.”

 

Urban Edge is making improvements to the existing building to allow conversion of the first story to a 103,000 square foot high-bay warehouse featuring 26-foot ceiling clearance, 7 new loading docks, LED lighting with motion detection, and a new roof and parking lot.

 

“With the recent market challenges resulting from COVID-19, we are pleased to have identified this use and secured a terrific lease and partnership with AAA Wholesale Group,” said Chris Weilminster, EVP and COO of Urban Edge Properties. “The market remains active, especially in premier locations, and we look forward to continuing to execute on Urban Edge’s strategy of maximizing well-located, infill, transit-oriented assets that serve their surrounding community.”

 

ABOUT URBAN EDGE PROPERTIES

 

Urban Edge Properties is a NYSE listed real estate investment trust focused on managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the New York metropolitan region. Urban Edge owns 78 properties totaling 15.1 million square feet of gross leasable area.

[realassetsvalue]

I need to do more work to have conviction on these strip centre REIT ideas but they seem very interesting. I have Urban Edge at a 7.5% cap rate on Q2 2020 annualised NOI (reflects COVID bad debt) and $170 PSF. I think the NOI / cash flows will be stabilish but trending down over the next 3-4 years but value will come from redevelopment to other uses - multifamily, self-storage and maybe a bit of logistics, like UE is doing.

 

Have you looked at Urstadt Biddle (UBP / UBA) at all? similar geography to Urban Edge, smaller and even less on the radar, CEO married into the owning family and owns a lot of the company (like 30%), less well capitalized (but nowhere near the Cedar-zone of debt load). Presentation from June: http://investors.ubproperties.com/Cache/IRCache/6a7bacab-1c6a-5149-38c5-61e9efd2bcf1.PDF?O=PDF&T=&Y=&D=&FID=6a7bacab-1c6a-5149-38c5-61e9efd2bcf1&iid=4078030

 

ROIC is the west coast name that I bought a bit of in March and considering adding to - not as cheap at a 6.5% cap / $290 PSF and higher leverage but portfolio quality and operational performance have been a lot better I think over the last 4-5 years since the start of the retail apocalypse (in earnest at least).

 

Appreciate your thoughts, input and listed real estate idea flow!

 

 

[thepupil]

I looked at Urstadt and just "like" UE better, mainly because of the cash pile, scale, VNO heritage versus culty-dividend / family stock heritage.

 

I didn't go too deep and don't have a more quantitative answer than that. UE just seemed "easier" to understand and have a greater capacity for aggressiveness with their cash pile and apparent development/redevelopment ability

 

have never looked at ROIC (only so much time) but perhaps I should.

[thepupil]

I didn't make money on Urban Edge.

 

right before its big run, I swapped it at a loss into JBGS which was dropping like crazy and about which i was more excited to hold long term.

 

I think this technically cost me since UE is up 45% and JBGS is up about 30% since, but I think it was the right decision longer term.

 

this transaction was already known/hinted at but it provides a lot of detail as to the power of a well capitalized equity holder vs CMBS/special servicers.

 

UE negotiated an option to repay the loan at a 44% haircut, an extended maturity, as well as years of IO rather than amortization.

 

I think this is relevant for any owner of real estate with non-recourse leverage where there may need to be a restructuring.

 

Urban Edge Properties Completes Debt Modification at Las Catalinas Mall and Announces Special Dividend

--2021 Dividend Policy Also Announced--

Business Wire

NEW YORK -- December 14, 2020

Urban Edge Properties (NYSE:UE) (the “Company”) announced the modification and extension of the mortgage encumbering Las Catalinas Mall located in Puerto Rico and a special dividend of $0.46 per share primarily resulting from the tax gain on the modification. The Company also announced its intention to reinstate its recurring quarterly dividend at $0.15 per share beginning in March 2021, subject to approval by the Company’s Board of Trustees. In making these announcements, the Company noted that it continues to see improvement in rent collection rates, which have increased from 78% in the second quarter to 85% in the third quarter and 90% in October.

“The debt modification at Las Catalinas Mall provides us with significantly improved financial flexibility and strengthens our ability to attract best-in-class tenants at the property. Our improved rent collection rate and recent leasing activity gives us increased confidence to reinstate a quarterly dividend during 2021,” said Jeff Olson, Chairman and Chief Executive Officer.

Las Catalinas Mall Debt Modification

The Company has executed a loan modification agreement pertaining to the $129 million, 4.4% mortgage loan encumbering Las Catalinas Mall. The loan has been modified to include the following terms:

An option for the Company to repay the loan at a discounted value of $72.5 million, a $56.5 million reduction to the current balance, beginning in August 2023 through the extended maturity date;

An extension of the loan’s maturity date from August 2024 to February 2026; and

A conversion from an amortizing 4.4% loan to interest only payments with a reduced interest pay rate over the next three years, starting at 3% in 2021 and increasing 50 bps annually until returning to 4.4% in 2024 and thereafter.

As part of the Company’s plan to re-tenant and enhance Las Catalinas Mall, the Company has committed to fund a capital reserve with approximately $5 million to be used for leasing and other capital improvements. The Company remains focused on growing the mall’s NOI by re-leasing anchor and other vacancies.

The transaction will result in an annual benefit to Funds From Operations of approximately $0.05 per diluted common share as compared to the original mortgage’s accounting treatment.

2020 Special Dividend

The Company also announced that its Board of Trustees has declared a special cash dividend of $0.46 per common share, payable on January 19, 2021 to shareholders of record on December 31, 2020. The special dividend is based on the Company’s expected 2020 taxable income which includes the tax gains associated with the Las Catalinas debt modification and the previously announced debt forgiveness and refinancing of the mortgage loan on The Outlets at Montehiedra.

2021 Dividend Policy

For 2021, the Company intends to reinstate the dividend at a rate based on projected taxable income for the year, which is expected to result in a quarterly dividend of $0.15 per common share, subject to approval by the Company’s Board of Trustees.

About Urban Edge Properties

Urban Edge Properties is a NYSE listed real estate investment trust focused on managing, acquiring, developing, and redeveloping retail real estate in urban communities, primarily in the New York metropolitan region. Urban Edge owns 78 properties totaling 15.1 million square feet of gross leasable area.

Forward-Looking Statements

Certain statements contained in this Press Release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future performance. They represent our intentions, plans, expectations and beliefs and are subject to numerous assumptions, risks and uncertainties. Our actual future results, financial condition and business may differ materially from those expressed in these forward-looking statements. You can find many of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” or other similar expressions in this Press Release. Many of the factors that will determine the outcome of forward-looking statements are beyond our ability to control or predict. For discussion of factors that could materially affect the outcome of our forward-looking statements, see “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2019 and the other documents filed by the Company with the Securities and Exchange Commission.